Separate Rule Making for Gainful Employment

Submitted by Paul Fain on June 12, 2013 - 3:00am

The U.S. Department of Education plans this fall to begin a stand-alone round of negotiated rule making on "gainful employment" regulations, which would keep tabs on vocational programs at for-profit colleges and some nonprofit institutions. The department's plan to pursue a new set of regulations, given that a federal judge struck down the original version last year, is not a surprise. But in an announcement[1] in the Federal Register this week, the Education Department said it planned to hold separate discussions on gainful employment this fall, rather than as part of a broader rule-making session[2] that might also tackle fraud protection or state authorization of distance education.

The federal court ruled[3] that the department had failed to adequately establish justification for the threshold it set for loan repayment rates. (The other standards dealt with debt-to-income ratios.) However, the judge said the department was on firm ground philosophically in its effort to regulate the return on investment of vocational programs. But the Obama administration appears to have chosen to take another run at crafting a new set of rules rather than trying to resuscitate the old ones in court.

Gainful employment was a long, bruising battle. For-profits and some Republican lawmakers had asked that a new debate over how to regulate vocational programs be folded into the renewal of the Higher Education Act, which is scheduled to expire this year. By pursuing a new round of rule making on gainful employment, the department appears to be continuing to focus primarily on for-profits , in contrast to proposed legislation[4] that would scrutinize employment outcomes of higher education more broadly. The Association of Private Sector Colleges and Universities, the sector's primary trade group, issued a written statement[5] saying it was disappointed by the prospect of a "repeated, faulty and confrontational process" on gainful employment. The department will select members of the committee, which is slated to meet first in September.